Housing Affordability

Affordable Housing Units Decrease as Home Prices Increase

Why is it important?

Along with food and oxygen, shelter is one of the basic physiological human needs according to psychologist Abraham Maslow. For most families, shelter in the form of housing is the least affordable of these basic physiological needs. Satisfaction of physiological needs enables humans to work toward more advanced needs, such as safety, society, and self-actuality.1
Higher costs for shelter mean individuals and families have less to invest in other needs such as food, clothing, education, and medical care. Many residents fear affordable housing could erode community quality, reduce property values, or change existing demographics. However, the typical affordable housing development incorporates state-of-the-art design innovations and materials making them functionally and aesthetically compatible with surrounding homes. Affordable housing projects also can serve as anchors for downtown economic development. In addition, a lack of affordable housing limits the speed at which financial capital can grow by limiting housing availability for lower-income workers.

How are we doing?

Falling interest rates have not been sufficient to keep housing affordable in the wake of skyrocketing home prices in the North Central and East subregions. The extreme increase in the North subregion between 2000 and 2003 is a result of rising incomes and more stable home prices locally, combined with lower interest rates. Rising interest rates may decrease housing affordability and/or lower property values.

1 Weisman, Daniel D. Expanding the Limits of Self-Determination. Institute for Labor Studies and Research. Part of the Freedom Talks Series Presented by The Rhode Island Council for the Humanities, October 2003. http://www.rilaborinstitute.org/freedom/weisman.html

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